Why Multifamily Rentals Are so Hot Right Now
Multifamily rentals have been getting a lot of attention lately, and there are some great reasons why, especially for investors who have already been working in real estate. With the number of house sale listings relatively low and home prices rising, adding new single-family dwellings is becoming more expensive, and there are also higher overhead costs associated with it, since geographic spread, the increased cost of maintenance on separate structures, and potentially having to work with multiple management companies all add to the bottom line.
Since the market is no longer making it easy to pick up new single-family dwellings, this is an ideal time to convert some of your properties into cash with either a sale or a cash-out refinance and to acquire multifamily properties. Unlike traditional homes, apartment buildings and other multi-unit properties tend to hold their value consistently, making them a stable, income-earning investment. Purchasing a single building with multiple units consolidates your maintenance overhead, allows you to plan better prevention strategies, and gains you an overall better return on investment while increasing your opportunities for additional income streams.
That’s the other big reason multifamily rentals are so hot right now. Whether your additional income stream comes in the form of a simple set of amenities like coin-operated laundry and snack vending or you plan for larger, more ambitious expansions, having the kind of tenant population that multi-unit buildings bring presents you with an opportunity to offer amenities that make your property competitive with their other options while bringing in more income for your business.
The opportunities are there for you to seize—some larger resort-style rental communities go all-in with storefronts and even franchising opportunities for secondary entrepreneurs right on-site. Others combine commercial and residential real estate with downtown buildings that combing street-level retail spaces and high-rise living. The key is to think beyond the commonplace and to imagine what your entrepreneurial innovation can do with multi-unit rentals, because the audience for rental properties is wide and deep, and there are levels in the market that fit every investor’s individual identity.
Ideally, now would be the time to add multifamily properties to a portfolio with some strong individual rentals as well, but if the market continues to make home values rise, there could soon be a time when it becomes profitable to convert a large number of your single-family dwellings into cash, and when that turn in the market comes, you can expect these multi-unit properties to become more sought after. Getting in before that point in the market means being positioned to take advantage of that eventuality.